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Meeting on 10 September 2010 at Eesti Pank

ESTONIAN NATIONAL USER GROUP FOR THE TARGET-2 SECURITIES PROJECT

10 September 2010, 9:30-11:00
Eesti Pank, Tallinn

Minutes of the Meeting

Chairperson of the meeting: Kadri Martin
Secretary of the meeting: Keiu Sopp

Agenda of the meeting

1. Overview of the general status of the T2S project
2. Events held and further progress
3. Overview of the T2S Advisory Group meeting in September and subsequent EENUG activities
4. Other activities between the CSD contact group and CSDs
5. Annual plan and other topics

1. Overview of the general status of the T2S project

Kaire Torsus, representative of Eesti Pank, gave an overview of the latest developments of the T2S project.

Keywords:

Legal framework
According to the updated time schedule, the Framework Agreement to be concluded with the CSDs and the agreement designed for non-euro area countries should be completed by the beginning of 2011. After the positive euro decision, Estonia must only deal with the first agreement, the signing of which is scheduled for September 2011. Regulators will receive the Framework Agreement at an earlier time (in August 2011).

Governance
The governance structure will take effect together with the Framework Agreement to be concluded in 2011. No changes will be made in the governance structure in the future. Thus, it will remain in force until the launch of T2S, and thereafter.

Connectivity
Criteria are currently being developed for the selection of the T2S network service providers. In 2011, the central bank of Italy will organise a tender for the selection of three service providers meeting the established criteria.

Documentation
The 4CB developing the T2S project have completed version 4.0 of the GFS (General Functional Specifications). The document has also been approved by the T2S Programme Board. In 2011, the development of the UDFS (User Detailed Functional Specifications) will be launched on the basis of the GFS.

2. Events held and further progress

Schedule of a settlement day in T2S, June 21

A workshop on the T2S settlement day was held on 21 June 2010, followed by a market consultation in August. Work is yet to be completed on the schedule of the settlement day, with the next workshop to be held on October 11.

Estonia has not actively pursued the matter, failing to participate at the meetings and consultations. EENUG members acknowledged the inability to actively participate, in the near future, in the work groups pursuing the matter.

Info session, June 24

No-one participated on behalf of EENUG at the info session held in June. Kaire Torsus brought out the most important subjects for Estonia discussed at the info session: direct holding systems/markets, implementation of the ISO 20022 standards and liquidity issues.

2nd workshop on smooth cross-CSD settlement in T2S, June 29

No-one participated at the workshop on behalf of EENUG. Kaire Torsus gave an overview of the progress made in the matter: On June 29, the second workshop was held on smooth cross-CSD settlement. A special working group will be set up for in-depth pursuit of the matter, establishing the standards for ensuring smooth settlement. The first meeting of the special working group is scheduled for 21 September 2010, with the mandate of the working group expiring in June 2011. In order to enhance the efficiency of the group's work, the number of participants is planned to be limited, with strict rules to be established accordingly. Estonia has also been invited to participate.

The working group will prepare questionnaires for the CSDs in order to get an input. The interim report is scheduled to be submitted to the T2S Advisory Group in March, and the final solutions in June.

2nd T2S and funds workshop, June 30

No-one participated at the funds workshop on behalf of EENUG. Keiu Sopp gave an overview of the progress made.
The second workshop was held on June 30, discussing various fund-related subjects and issues, including the area and purpose of application, role of the CSDs, issue and redemption of fund shares; distribution; finality; settlement cycle.
On the whole, the T2S Team found that T2S is neutral with respect to the functionality of the settlement service, and able to offer both combined market solutions and tailored solutions for particular markets.
Workshop participants shared the view that the fund market should take a leading role, act as a co-ordinator, and come up with a harmonised model for the cross-border issuance and distribution of fund shares. The market participants thus plan to set up a separate forum for handling these issues.

The next workshop is scheduled to be held at the beginning of 2011.

T2S Expert Network teleconference, August 31

Kaire Torsus gave an overview of the Expert Network meeting.
The purpose of the teleconference was to introduce the agenda of the T2S Advisory Group meeting of 8-9 September 2010. The most important subjects for Estonia included the pricing, governance structure and direct holding markets. No materials had been prepared on the latter by the time of the teleconference.

The next Experts Network meeting will be held on November 17 in Frankfurt.

As the summaries of all workshops and meetings are available on the T2S website, the representatives of Eesti Pank advised all EENUG members interested in a more detailed overview to study the materials themselves. Should EENUG members have any questions concerning the subjects not discussed within the EENUG framework, and wish to discuss these subjects in a wider circle, a written discussion may be held, or the corresponding item added to the agenda of the EENUG meeting.

3. Overview of the T2S Advisory Group meeting in September and subsequent EENUG activities

Kadri Martin gave an overview of the last T2S Advisory Group meeting.
At the meeting there were thorough discussions on T2S matching fields, pricing and the peculiarities of the markets with the direct holding systems.

Matching fields
The subject was raised by Deutsche Bank and the Dutch market participants in connection with the use of BIC 11. Two proposals were made by the T2S Advisory Group during the discussions: matching on the account level, and matching on the level of the users who have concluded an agreement with the CSDs. Votes were cast, with matching on the account level preferred (18 vs 11). It was agreed that the T2S Team would prepare an analysis on the effect of different solutions by way of a written consultation. As the subject may affect the account management options and pricing, the subject is important for Estonia and needs to be monitored.

Pricing
T2S Team presented new forecasts on the project cost in both the development phase (2008-2014) and the operational phase (2014-2021). In addition to the previous assumptions, the following circumstances were taken into consideration in the preparation of the proposed price list:

decrease in volumes, conditioned by the financial crisis;

CSD reporting errors in the presentation of the estimated volumes;

decrease in volumes, conditioned by the implementation of the CCP, central counter-parties (Denmark, Finland, Norway and Sweden in 2009/2010, Poland in 2011, Spain upcoming);

Direct holding markets
There is quite a lot of uncertainty concerning direct holding market solutions. A separate meeting will be held between the corresponding parties in the autumn. Two options were offered for CSDs to join T2S platform up together with the market participants:

the "all-in model", where all end-investor accounts are in the T2S platform;

the "layered model", where the end-investor accounts are located in the local CSD.

4. Other activities between the CSD contact group and CSDs

Julia Segerkrantz gave an overview of the meetings of CSD.

A CSD Contact Group meeting was held on June 22, and a CSDs meeting on governance was held on July 12.

ECRS did not participate at these meetings. Segerkrantz added that there was no news on progress or decisions for EENUG members.

The CESR meeting was held in Paris on September 6. 16 CSDs participated at the meeting which mainly discussed the problem issues raised by CSDs. New CESR meetings, with and without CSDs, are scheduled for October and November.

Segerkrantz also informed EENUG members of the new permanent address of ECSDA, and of the new full-time employee in Brussels.

5. Annual plan and other topics

EENUG activity plan

Kadri Martin made EENUG members the proposal to filter out the most important subjects for Estonia in the work schedule of the T2S Advisory Group and workshops in order to plan the future work schedule.
EENUG members approved the proposal. Proposals and opinions on the importance of the subjects are expected from the members by the end of September. Eesti Pank will use the information obtained to prepare the first list of subjects, which will be submitted in writing to the EENUG members for co-ordination in the middle of October.

Julia Segerkrantz, representative of ECRS, added that even though ECRS had failed to participate at every meeting so far, ECRS would always try to answer any consultations and questionnaires submitted.

With respect to the T2S Advisory Group meeting in September, it was pointed out that a meeting was scheduled to take place in the autumn with countries using the direct holding system. As Estonia is among these countries, the subject is of high priority for Estonia. Thus, the members found that at least one representative of EENUG ought to participate at the meeting.

T2S events

The upcoming events and the updated T2S annual plan were reviewed. The next EENUG meeting is scheduled for December 2.

The representatives of Eesti Pank informed EENUG members of the upcoming events:

- Info session in Dublin on October 8
- T2S Experts Network meeting on November 17
- T2S Advisory Group meeting on December 6-7